Month: August 2016

30 Aug

5 COMMON MYTHS ABOUT CREDIT SCORES

General

Posted by: Anne Martin

6 MAY 2016

5 COMMON MYTHS ABOUT CREDIT SCORES

5 Common Myths About Credit Scores

Because the top secret formula has never been released there are common myths that are floating around about the ones credit score, here are the top 5.

1. TOO MANY CREDIT CARDS WILL HURT MY CREDIT SCORE

Actually, cancelling healthy active cards or accounts hurts more as all of the payment history is lost along with the type of credit granted. The average Canadian has 10 credit sources, having more does not hurt as long as you pay on-time. Along with paying on-time you should observe the rule of maintaining a balance at no more than 75% of the limit, but less is best. Applying for new credit every week will lower your score more.

2. USING CREDIT TO BUILD A CREDIT SCORE

Remember to keep your balances low and manageable. The credit bureau only receives reports regarding your balances and payments. Making your payments on-time builds your credit history strength and score.

3. MY UTILITIES AND INTERNET ARE PAID ON-TIME EVERY MONTH

These providers only check your credit to determine creditworthiness. They don’t report your payment history to the bureau. On the flipside, they only report when you DON’T pay. The other organizations that only report upon default are municipalities and ICBC. Pay your traffic tickets and bylaw infractions.

4. CHECKING MY SCORE WILL DECREASE IT

There are two types of inquiries, soft and hard. A soft inquiry occurs when you pull your own credit report. Credit card companies also pull soft inquiries when marketing pre-approval offers. A hard inquiry happens when submitting a loan or credit card application. A hard inquiry is one that is triggered by the applicant. Soft inquires do not affect the credit score. A consumer can pull their own credit score as many times as they wish without repercussions. Hard inquires affect the score slightly. These inquires are included in the calculation done for credit scoring. Recording the number of inquires a consumer has on the credit report allows potential lenders to see how often a consumer has applied for new credit. This can be a precursor to someone facing credit difficulty.

Too many inquiries could mean that a consumer is deeply in debt and is looking for loans or new credit cards to bail themselves out. Another reason for recording inquires is identity theft. Hard inquires not made by you could possibly be an identity thief opening accounts in your name. Inquires are required to remain on the credit report for at least a year. Hard inquires remain on the report for two years. Soft inquires only appear on the report that you request from the credit bureaus and will not be visible to potential creditors. Hard inquires appear on all credit reports. All inquires disappear from the report after two years. Only individuals with a specific business purpose can check your score. Creditors, lenders, employers and landlords are some examples of approved business people. The inquiry only appears on the credit report that was checked.

5. THERE IS NOTHING I CAN DO ONCE A PAYMENT IS LATE

Creditors are always willing to work with you if there is a late payment. If notified in a timely manner a late payment can be easily removed, just don’t make a habit of it. Some is better than none.

Michael Hallett

MICHAEL HALLETT

Dominion Lending Centres – Accredited Mortgage Professional
Michael is part of DLC Producers West Financial based in Coquitlam, BC.

24 Aug

RENOVATING MAY MAKE MORE SENSE THAN BUYING

General

Posted by: Anne Martin

RENOVATING MAY MAKE MORE SENSE THAN BUYING

Renovating May Make More Sense Than BuyingIf you’re finding your family has grown out of your current home or your house could use a makeover to better fit your changing needs, renovating is a great option to examine. Instead of putting your home on the selling block and heading out shopping for a new home right away, it may be worth considering using some of your home equity to renovate so you can remain at your current address.

The first consideration is whether your home can be adjusted to meet your needs. Is your lot big enough for an addition? Will your foundation handle the weight of an extra floor? Does the tired look of your home require a major overhaul? Will the renovations add value to the home?

Plan out the changes you’d like to make and speak to professional renovators to seek several quotes before making your decision.

Next, depending on the complexity of the project, you have to decide if it’s worthwhile for you and your family to live in a construction zone for several weeks or even months while improvements are being made to your home.

Finally, unless you have a lot of money saved up, you have to weigh your finances to determine what makes the most financial sense to you and your family in the long run.

Weighing your finances

Now is a great time to think about making renovations to your existing home to create your dream home. With mortgage rates still sitting at historic lows, it makes sense to use some of your home equity to put towards renovations that could help you remain in the house you love, in the neighbourhood you desire that’s close to work, school and amenities to which you’ve grown accustomed.

Other possibilities include a home equity line of credit (HELOC) – where you can access money as required for each stage of your renovation – or even a construction mortgage may be your best bet. The key is to talk to your Dominion Lending Centres mortgage professional who has access to multiple financial institutions and products to ensure you get the most bang for your buck.

It’s important to weigh the renovation costs with the potential for your home to increase in value as well.

Moving can also be quite expensive. Possible costs to consider when moving include:

* real estate fees (upon selling your existing home)

* legal fees

* property transfer tax

* moving expenses

* decorating the new home

* mortgage penalty

Other considerations

The decision between renovating and upgrading to a new house is not solely financial. You should also consider your time, energy and peace of mind.

Each choice has advantages and disadvantages. When determining the best option for you and your family, consider the pros and cons of both renovating your existing home and moving to a new home.

By taking into account what you want to do, why you want to do it, the costs of the renovations and upgrades, and the value of your renovated home in relation to other homes in your neighbourhood versus the costs of buying a new home, you can determine which option is best for you.

 
Alisa Aragon

ALISA ARAGON

Dominion Lending Centres – Accredited Mortgage Professional
Alisa is part of DLC Canadian Mountain View based in Maple Ridge, BC.

20 Aug

Why A CHIP Reverse Mortgage?

General

Posted by: Anne Martin

What do you see when you sit down and imagine your retired self?

For many people they see themselves relaxing in their home without many worries. While this is the dream, the reality is that people can be in for an unexpected surprise.

A Canadian Home Income Plan is a reverse mortgage solution that helps people who are 55 years old and older experience the joy of having more financial flexibility without the need to move or sell their home.

As a Barrie mortgage professional, I have had many clients in the past who came to me because they were hit with unexpected expenses or weren’t prepared for the sudden drop in income once they retired. I help these individuals by setting them up with our CHIP Reverse Mortgage program that is designed to help seniors prepare for retirement. This program has helped thousands of individuals over the past 25 years.

With a CHIP Reverse Mortgage you will keep all of the equity remaining in your home. The total amount of equity that is left will depend on how much you borrow in addition to the amount of time that has passed since beginning the reverse mortgage and the value of your home. 99% of the time, there is always equity left when the borrower leaves the program. It works by giving you up to 50% of your home’s value, ensuring you are equipped with financial security and access to cash.

You will also keep the title and ownership of your home, just as you would with a traditional mortgage. What this means is that you won’t have to move or sell until you want to do it, and the bank will never own your home as long as you remain in good standing by keeping your taxes paid and the home in good condition.

One reason people tend to shy away from reverse mortgages is because they automatically think they will be ineligible due to a bad credit rating or no income. This is not the case, and you certainly are able to qualify if you have no income or a poor credit score.

A CHIP Reverse Mortgage will allow you to keep your retirement savings for a longer period of time. This is possible because it’s a fantastic way to provide yourself with increased financial flexibility with tax-free money. Additionally, no monthly payments are required and the only time you will be asked to pay is when you choose to move or sell the home.

For even more reading on CHIP, you can check out the chip.ca website.

Is a CHIP Reverse Mortgage a good fit for you? If you are 55 years old or older and interested in what a reverse mortgage can offer you, this could be the perfect mortgage solution for you.

It’s important that you are prepared for what retirement can bring financially so you can enjoy it as you should – relaxing without a worry. If you think a reverse mortgage in Barrie could be a fit for you, I encourage you to contact me as I would be happy to discuss how we can work together to get you into position for financial success in both the short term and long term.

20 Aug

3 Great Reasons Why You Should Refinance Your Mortgage

General

Posted by: Anne Martin

If you didn’t already know, there are many reasons why refinancing a mortgage could be extremely beneficial to you.

Maybe you need some extra money to renovate your home or maybe you want to pay less each month. Whatever your reasons entail, a Barrie mortgage locator like myself can help you determine if refinancing is the right thing to do.

If you already know what refinancing is or wondering why you should think about it, consider these 3 Great Reasons Why You Should Refinance Your Mortgage:

1. Decrease your payments & interest rate

One reason that people I see want to refinance their mortgage is to lower the rate of interest they are paying collectively to mortgage and expenses. With Canada seeing some of the lowest mortgage rates ever in the past year, the odds are that it is currently lower than what your current rate is. If this is the case, refinancing may be of interest to you.

Refinancing to a lower rate could potentially save you thousands of dollars when all is said and done. Doing so will also lower the amount your currently pay each month, freeing up valuable money to save or spend elsewhere.

2. Debt consolidation

Another good reason why I see people who want to refinance their home is to consolidate debts that have accumulated over time. They may have high balances on their credit cards and are paying high interest rates which can severely affect their monthly cash flow and life style. If you have at least 15% equity in your home it might be time to consider using that equity to reduce your monthly expenses before it affects your life style and credit standing.

If you already have bruised credit and have a low credit score, no problem, there are mortgage solutions for you too.

3. Change your rate type

Another reason why many people show interest in refinancing their mortgage is to change the type of rate they currently have. For example, an individual may want to switch from a variable-rate to a fixed-rate, or vice versa.

A variable rate fluctuates with the prime interest rate, rising and dropping as such. In comparison, a fixed-rate locks your mortgage in at the current rate of interest, offering those who choose this type with the peace of mind knowing exactly how much they will be paying at the end of each month. Each type is different and every person has their preferences, but a fixed-rate at some of the lowest rates we’ve seen could save you money in the long run.

Merely, locking into a fixed rate with your current lender may not be the best option, contact me to find out why.

4. Home equity cash out

If you are in need of some cash for home renovations or to start your own business, refinancing your mortgage is a reasonable option. Cashing out some of your home equity by refinancing your mortgage can provide you with the finances necessary to complete these objectives.

One important thing to remember if you are refinancing for this purpose is that you should have a good set of financial management skills in order to limit the risk of costing yourself more money down the road.

If you are seriously considering refinancing your mortgage, I can help make sure that you are set up properly and can actually afford to do so. As someone who has been involved in the Barrie mortgage industry for several years, I have successfully helped many clients benefit from refinancing.

If this is something that interests you or think may benefit you, I would be more than happy to discuss how I can help. Contact me today!

15 Aug

WHAT IS MORTGAGE INSURANCE?

General

Posted by: Anne Martin

WHAT IS MORTGAGE INSURANCE?

What Is Mortgage Insurance?

When you purchase a property, you may be a little overwhelmed by all the insurance offers related to purchasing a new property that come your way. Mortgage Insurance, Condo Insurance, Mortgage Default Insurance, Earthquake Insurance; the list goes on and on. It can be confusing and it is important to know what insurance covers what.

For instance, Mortgage Default Insurance is solely for the purpose of the lender and not to be confused as mortgage default insurance for the consumer. Yet, you, the consumer, are responsible for the cost. If you put less than 20% down on a property purchase, you are responsible to pay for Mortgage Default Insurance which covers the lender if you should default on the payment of your mortgage. As well, conditions of the mortgage may require that House/Condo Insurance needs to be purchased in order to fund the mortgage as to protect the consumer and ultimately the lender from severe losses. This kind of insurance may or may not be mandatory.

Alternatively, Mortgage Life Insurance is not mandatory and is purchased to cover the mortgage if the consumer becomes seriously ill or even dies unexpectedly during the term of the mortgage. Usually, this is purchased when the owner of the house has a family or dependents that will inherit the property and would not be able to financially carry the property without the primary owner’s income. The only difference between Term Life Insurance and Mortgage Life Insurance is that the Mortgage Life Insurance is meant to pay off the consumer’s mortgage. But, depending on the policy, the money that is issued on the Mortgage Life Insurance can be designated for the mortgage only. Or, it may be available for other, more necessary expenditures. It all depends on the policy.

Mortgage Life Insurance is certainly a recommendation for those that have not yet saved up enough to be able to secure themselves with savings such as RRSPs or Pensions. Whether the consumer purchases it through a referral from their Mortgage Broker or perhaps has it already through their employment, Mortgage Life Insurance is a wise choice for anyone who wants to set their future up securely.

Top 9 Benefits of using Mortgage Life Insurance

1. Peace of mind – having Mortgage Life Insurance creates a sense of security that your loved ones will be well taken care of if you, as the main breadwinner of the family, pass on.

2. Easy to get – Mortgage Life Insurance is based on the mortgage and your age. There are a list of standard questions to answer.

3. Mortgage paid off in the case of death – having Mortgage Life Insurance ensures an extra level of coverage, whereby any other policies that are held will be able to assist with other needs.

4. Family can stay in their home – if there is the unfortunate life event that is the death of the Mortgage Life Insurance policy holder, the mortgage will be paid off which will allow the family to stay in their home and not become displaced, causing more despair than needed.

5. It protects your family’s finances – Mortgage Life Insurance pays off the mortgage, which means that your family’s finances stay intact.

6. Lost wages – if you become seriously ill, Mortgage Life Insurance can cover your mortgage payments for a specified time period (ie up to 3 years). Unexpected life events such as a serious

car accident can result in missed mortgage payments as a result of loss of wages as you need to recover from injuries.

7. Portability – some Mortgage Life Insurance policies are portable. Which means that if you buy a new property, you will be able to transfer your Mortgage Life Insurance to a new property. Make sure you ask your Insurance Provider if the insurance they are recommending is portable. Take note that when the bank offers you Mortgage Life Insurance you will not likely be able to transfer your Mortgage Life Insurance to a new lender, thereby limiting your future financing options.

8. If you are a young buyer, your Mortgage Life Insurance premiums will be very low. Which means that this insurance is extremely affordable for a young, and likely, first time home buyer.

9. Good health now results in coverage for unexpected illness later on. After illness strikes, it is more difficult to acquire life insurance.

Mortgage Life Insurance is an option that anyone with a mortgage can consider. However, it is important to know what your options are in regard to the Mortgage Life Insurance itself. Asking your Mortgage Broker for a referral to a reputable and credible Insurance Representative is paramount in finding an Insurance Broker that knows available products, that specifically fits your needs. Every individual is unique and needs an insurance product that is fashioned for their individual situation. A good Insurance Representative will be a Broker that knows what insurance products are out there as well as knows what you, the consumer, needs. The great thing about taking on Mortgage Life Insurance is that you can cancel anytime if at a later date you find an insurance product that suits you better.

Remember to take inventory of insurance products you are already signed up with. If your employer provides you with a benefits package, make sure you find out exactly how much coverage you have and if that coverage will adequately provide for your financial needs. If it does, then maybe you don’t need any Mortgage Life Insurance. On the other hand, if your current coverage won’t be enough, then maybe a good Mortgage Life Insurance policy is something to consider.

For more information regarding Mortgage Life Insurance contact any of the 2,500 mortgage professionals at Dominion Lending Centres and we’ll put you in contact with an Insurance Representative that will provide you with viable Mortgage Life Insurance options.

 
Geoff Lee

GEOFF LEE

Dominion Lending Centres – Accredited Mortgage Professional
Geoff is part of DLC GLM Mortgage Group based in Vancouver, BC

4 Aug

HOW TO GET A MORTGAGE WHILE BEING SELF EMPLOYED IN CANADA

General

Posted by: Anne Martin

HOW TO GET A MORTGAGE WHILE BEING SELF EMPLOYED IN CANADA

How to Get a Mortgage While Being Self Employed in Canada

There are great advantages to having business for self. There are many extremely successful business owners that live great lifestyles but don’t have to pay for medical, all because they have great tax write-offs that bring their income down to a low tax bracket. The other side of this is that these great benefits actually make these same business owners work hard to qualify for a mortgage, all because their income is significantly reduced on paper. These business owners know that there is advanced planning involved in being able to qualify for conventional financing.

According to Statistics Canada, in 2015 there were about 2.7 million people self-employed in Canada which is about 14% of the total population of the country. These statistics reflect people that are continuing on in maintaining a significant lifestyle financed by self-employment and being able to be counted as such. In other words, being self-employed is a viable way of making income. It just doesn’t fit very well in the conventional lending “box”.

In order to fit in the conventional lending “box”, there is a measure that lenders require that each mortgagee(s) (the person(s) applying for the mortgage) must meet. Some of the documents that self-employed have to provide for the lender are two most recent years of tax returns that don’t always accurately reflect the actual take-home that a self-employed person has. Tax deductions related to business often reflect meals to rental space to credit card interest, etc. The result is that the income the self-employed business owner shows on their tax return is a significantly lower figure than what they actually take home. However, the “box” requires that tax returns show the required income to justify the mortgage.

So, how does one show enough income when they are self-employed? The following points are suggestions on strategies on how to plan ahead and be prepared when you, as someone who is self-employed, are ready to move forward in arranging a mortgage for property purchase.

  • The easiest way to plan is to write off fewer expenses in the two years leading up to the property purchase. Yes, this means you will pay more personal taxes. However, your income will be higher which will easily qualify you for the mortgage amount that you are looking for.
  • Set your finances up through a certified accountant. Many lenders want to see self-employed income submitted through a professional rather than doing it yourself. The truth is that the time that you spend doing your own taxes will not be as efficient both financially and time wise as a professional. A certified accountant knows what to look for and has enough experience to understand the tax implications. Make sure you discuss with them what your goals are so that they can set up your taxes appropriately.
  • Choose your timing carefully. If you are leaving on an extended holiday or sabbatical within the two years previous to purchasing, your two-year average income is not going to be great. Take all the time off that you want AFTER your purchase. Plan your timeline with INCOME in mind.
  • Ask your Mortgage Broker about STATED INCOME. There are options with some lenders to State your income. This is based on you being in the same profession for at least two years previous to being self-employed. The lender looks at the industry and researches the mean income of someone in that same profession within a reasonable amount of time. STATED INCOME is a complicated approach to showing income. However, your Dominion Lending Centres Mortgage Professional will know what questions to ask and how to negotiate this kind of proof of income. Documents such as bank statements, showing consistent deposits, will be requested by the lender.
  • BANKRUPTCY. Although some business people see bankruptcy as a viable option to get out of a bad deal and regroup, lenders generally do not like bankruptcy. Having said that, some lenders will overlook this if there has been consistent and excellent credit since the time of bankruptcy and you have been fully discharged from the bankruptcy for a specific time period. Make sure you keep ALL Bankruptcy papers easily available along with your discharge papers.
  • Be prepared for higher interest rates. Lenders offer discounted rates to those that fit in the “box”. Those that are not conventional are seen as a risk and, therefore, are applied to a higher interest rate. There also could be lender fees attached to the mortgage.
  • Offer a larger down payment. Lenders are somewhat handcuffed to the insurer when there is less than 20% down payment on a property purchase. But if you offer more than 20% down payment, depending on the lender, their flexibility increases and it is up to the lender or even the branch if they want to take you on as a client.
  • As a last resort, you can do private financing. Even though it is an expensive option, it could result in the mortgage you are looking for. Rates are higher and there will be lender/brokerage fees. However, you could be in a private mortgage for 12 months or even less, whereby giving yourself time to improve your credit (if need be) or topping off a two year self-employed period to set yourself up to show STATED INCOME to the lender. The whole point of private financing is to use it as a short term solution for a long term plan.

Being self-employed does not mean that you have to show enough income on your T1 General in order to qualify for a mortgage. There are many factors involved in showing income when you are self-employed. And every lender has different guidelines as to how they view self-employment. If you are self-employed, plan accordingly and make sure you are well set up to show that the lender that you are a desirable candidate for a mortgage.

 
Geoff Lee

GEOFF LEE

Dominion Lending Centres – Accredited Mortgage Professional
Geoff is part of DLC GLM Mortgage Group based in Vancouver, BC.